Market Overview 

Prepared by: Mayada Amin- CETA, CFTe

Some provisions of the customs law have been amended to facilitate customs release procedures under a decision issued by Finance Minister. 

The Supreme Council for Investments is studying offering more incentives to the industrial sector.

GAFI will launch its new digital platform within days. The platform will provide investors with the services to establish companies, authenticate contracts at notary offices, and register using electronic signatures among other services.

Mohamed Farid has been reappointed chairman of the Financial Regulatory Authority (FRA) for another one-year term.

The government has denied rumors circulating that it has sold USD billions worth of assets owned by the Endowments Ministry.

MFPC issued standalone results for 2Q23. Net profit after taxes amounted to EGP848 million (+3% YoY, -78% QoQ,), bringing 1H23 net profit to EGP4.776 billion, higher by 67% YoY. MFPC is trading at 2023 P/E 8.0x and EV/EBITDA of 4.0x.

HELI could this month wrap up negotiations to partner with an unnamed Gulf investor on its Heliopark project, according to local media.

HELI denied media reports that it intends to sell its Heliopark land plot to a local investor at a discount on a cash basis.

HELI stated that it did not receive an offer regarding media reports that a Saudi investor is offering to acquire 70.0% of HELI for USD400.0 million.

MNHD launched an R&D arm, Madinet Masr Innovation Labs, to provide digital solutions to the real estate market. The arm's first product, Touba, is a platform that offers customers solutions for purchasing and investing in real estate.

MNHD plans to expand its project portfolio to the North Coast, the Red Sea Coast, West Cairo, and New Nasser in Upper Egypt, according to local media.

Developers including Qatari Diar and Emaar Properties are in talks with GAFI on expanding their businesses in Egypt.

MTIE announced increasing the company’s issued capital EGP749 million, an increase of EGP149.8 million through the issuance of 241.7 million bonus shares (0.25 bonus share for each original share held). Record date is on 23 August 2023 and distribution date on 24 August 2023.

GAFI has received 3 investment requests worth USD180 million to establish feeding factories in the electrical and home appliances sector.

BTFH has received the greenlight from FRA to proceed with its acquisition of Minya-based microfinance provider Cash.

CICH has closed an EGP700 mn securitized bond issuance for its micro-financing arm, Reefy Microfinance.

Banque Misr is preparing to launch a new digital payments company in partnership with several financial institutions, including Banque du Caire.

Market Overview 
CIEB
ADIB
MTIE
BINV
EMFD


Prepared by: Mayada Amin- CETA, CFTe

After the USD-denominated CDs issued by public sector banks and the unexpected rates rise by the MPC, and with the next date for the IMF review in September, the market has started to focus, once again on weaker EGP beneficiaries. We remind you that ESRS, EGAL, TMGH, ORHD, and ADIB have not reached full potential in previous market rallies.

Reserves inched up to USD 34.88 bn in July from USD 34.81 bn in June.

Egypt is preparing to pay USD847.9 million to the International Monetary Fund this August over three installments, according to IMF.

Prime Minister Moustafa Madbouly arrived in Amman yesterday at the head of an Egyptian delegation set to hold bilateral cooperation talks with Jordanian officials.

The closing date for state-owned Shalateen Mining Company’s international gold exploration tender has been extended to November from an earlier 10 August deadline, in order for more countries to participate. 

Egyptian Electricity Holding Company (EEHC) and Egyptian General Petroleum Corporation (EGPC) have each borrowed EGP 10 bn from local banks to shore up our power infrastructure and fuel supplies. 

According to IQVIA, ISPH (FV: EGP2.4, OW) held the leadership position of the Egyptian pharma distribution market during 1H23 with total market share of 24%. During this period, the pharma market grew by 18.9% YoY.

ETRS is close to completing the acquisition of the National Company for Transportation and High Seas Services “NOSCO” which was valued at EGP174 million; which represents 30% of ETRS shares. The transaction will be executed through share swap.

China-based Midea Group is eying Swedish appliances manufacturer Electrolux Group’s Zanussi brand and factories in Egypt.

Al-Amal Car Assembly and Manufacturing Company, the agent of the “BYD” and “Lada” brands in Egypt, is in talks with the Russian side to reproduce “Lada” models in the Egyptian market, early next year 2024. 

Sugar prices jumped by about EGP 6,000 pounds per ton within two months, with the price per ton touching EGP25,000.

Orascom Financial Holding is applying for a digital bank license and evaluating the appropriate banking partner while expecting to reach the final decision in early September, 

HELI (FV: EGP12.44, OW) announced the resignation of its Managing Director and CEO, Tamer Nasser.

Weekly Commodities Update |           Last Price            WoW Change, %

Brent, USD/bbl            86.2     1.5%

Egypt Urea, USD/ton  467.0   3.4%

Polyethylene, USD/ton           1,050.0            2.9%

Polypropylene, USD/ton         910.0   0.8%

LME Aluminum Cash Price, USD/ton 2,185.0            0.9%

Egyptian Retail Cement, EGP/ton      1,710.0            0.0%

Steam Coal FOB Newcastle Australia, USD/ton            137.0   1.9%

Diesel-HSFO Spread, /ton      364.1   -12.2%

Steel/Iron Ore Spreads, USD/ton       354.4   -4.0%

Crude Palm Oil, USD/MT       838.7   -3.0%

SMP, USD/MT            2,454.0            -2.0%

Market Overview 
ABUK
ETEL
HRHO
GBCO
ORWE 
ESRS
ISPH


prepared by Mayada Amin - CETA, CFTe

The Central Bank of Egypt (CBE) hiked interest rates by 100 basis points on Thursday. 

The contraction in Egypt’s non-oil private sector slowed to its softest pace in nearly two years in July, suggesting initial pointers of a recovery in market demand following a lengthy downturn. The country’s PMI rose for a fourth consecutive month to hit 49.2 in July from 49.1 in June.
 
The government, in cooperation with the IFC, is studying offering minority stakes owned by state-owned agencies and banks in firms generating USD-denominated revenues.
 
The Suez Canal Economic Zone (SCZone) has received cabinet’s approval to set up a joint-stock investment company named SCZone Istithmar to strategically plan and manage the authority’s current and future investments.
 
Turkey’s largest state-owned bank and a number of Turkish manufacturers expressed their interest in expanding into the Egyptian market.
 
Russia could lower duties on commodities exports, including grain and fertilizers, to friendly nations.
 
The EBRD is investing EGP927 million (c. EUR27 million) in a securitized local currency bond issued by the New Urban Communities Authority’s (NUCA) special purpose vehicle, Al Taamir Securitization. 
 
SKPC released 2Q23 unaudited financial indicators posting an increase of 32% QoQ (+218% YoY) in net profit to record EGP689 million. Revenues recorded EGP2.9 (-18% QoQ, + 67% YoY). This could be attributed to a 7% QoQ decline in USD denominated polyethylene global prices and a 4% QoQ decline in EGP translated prices during the quarter as there was no currency devaluation during 2Q23 as compared to 1Q23. However, EGP translated polyethylene prices increased by 19% YoY due to EGP devaluation in the beginning of 2023.  SKPC is currently trading at a 2023e PE of 6.8x and an EV/EBITDA of 5.4x.

The government returned the normal natural gas flow to local fertilizer producers. It is noteworthy that the companies’ production was not affected by the recent 20% feedstock cut thanks to the ammonia availability in their inventories. 

ESRS’s (FV: EGP54.60, OW) extraordinary general assembly approved extending a payment guarantee in favor of its subsidiary IRAX (FV: EGP1,357.50, OW) with a maximum amount of USD250 million to finance the voluntary delisting of IRAX. The government, which owns around 32.9% of IRAX, will exit the voluntary delisting process, and that ESRS will not buy any shares. IRAX will buy its shares in a process similar to buying treasury shares.

Egyptian Competition Authority (ECA) agreed to extend its decision to reduce the production of local cement producers (quota allocation) for another year, according to local media.

COMI offered a USD certificate of deposit for a year with a return of 6% to be paid monthly, with a minimum deposit of USD10,000.
 
Banque Misr plans to launch the country’s first digital bank in the first quarter of next year.

The FRA said that premiums for commercial insurance companies amounted to approximately EGP25.2 billion during the first 5 months of 2023 (+35% y/y). Insurance companies operating in the Egyptian market achieved total premiums of approximately EGP28.7 billion by the end of May 2023 (+29% y/y).

Turkish home appliances manufacturer Vestel and conglomerate Zorlu will soon visit Egypt to explore plans to build a home appliances factory with investments of more than USD70 million in an initial phase.
 
KOC Holding wants to establish a factory for automotive feeder industries, a car manufacturing plant, and a medical products plant.
 
Milat Carpet is planning a visit to explore the feasibility of building a furniture factory in Damietta.

 Fine Hygienic Holding plans to increase investments in Egypt to USD185 million next year, up from USD178 million this year.

Market Overview 

We expect CBE to maintain interest rates at its meeting today in light of the preceding interest rate raises taken in December and March (+500 bps) to attempt to control the then expected rise in inflation. In addition, raising interest rates will be closely tied to the movement in the official exchange rate, which is not expected to happen before 4Q23. 

Oil cartel OPEC+ is expected to leave output at current levels when it meets tomorrow, according to Reuters.

Egyptian Trade Minister Ahmed Samir and his Turkish counterpart Ömer Bolat agreed yesterday to increase bilateral trade by 50% to USD15 billion over the next five years during talks in Ankara.

The Ministry of Electricity formed a committee to study offers submitted by Indian, Chinese, German, and American companies to supply batteries to store electricity produced from renewable energy.

Egyptian purchases of bullion and gold coins jumped during 2Q23 by 214% YoY to 10.4 tons. During 1H23, Egyptian purchases of bullion and gold coins amounted to 18.6 tons, compared to 19.2 tons in Jan-Dec 2022.

The cabinet yesterday approved an additional allocation of EGP2 billion to the sixth phase of the export subsidy program, increasing the total amount earmarked for this phase to EGP12 billion.

GASC bought 300k metric tons of wheat from Russia and another 60k metric tons from Romania in an international tender yesterday.

According to local media, TMGH achieved sales of EGP51.0 billion in 1H23. This figure likely includes not only TMGH sales, but also sales made for non-TMGH entities for which TMGH receives commissions.

According to local media, PHDC achieved sales of EGP10.2 billion in 2Q23 (+98.6% y/y, +50.9% q/q), bringing 1H23 sales to EGP17.0 billion, up 59.1% y/y.

Local fertilizers producers announced in EGX releases the impact of the natural gas feedstock 20% reduction decision on their production. EFIC stated that it is not affected by any means because it is producing phosphate fertilizers, which depends on the phosphate rock as its main input and natural gas is used in very small quantities as a fuel source. Kima noted that the ammonia produced was reduced by 20%; however, the company managed to overcome this drop thanks to the availability of ammonia in its inventories. EKHO announced that its subsidiary Alex Fert witnessed a very slight impact from the decision that will not have an effect on its performance.

Shell is set to begin drilling new gas exploration wells at its concession areas in the Mediterranean in September. 

According to local traders, free market fertilizers prices hiked after the new natural gas feedstock reduction decision. Average prices for fertilizers increased by EGP3,500/ton till now.

CIEB 2Q23 consolidated bottom line recorded EGP1,289 million (+5% q/q, +146% y/y. Annual and sequential growth were supported by: 1) improved margins, 2) robust gains from FX transactions, and 3) lower effective tax rate. CIEB is currently trading at 4.5x P/E23 and 1.3x P/B23.

CNFN has rolled out financing services for weddings and social events. It is offering up to EGP1 million in finance with no down payment, with repayment plans of up to three years.

MBSC recorded earnings of EGP43 million in 2Q23 compared to a net loss of EGP3 million in 2Q22 and 29% lower than 1Q23, brining 1H23 earnings to EGP105 million (+135% YoY). The annual surge in earnings was driven by healthy growth in revenues and operating margins despite a forex loss of EGP59 million recorded during the quarter. MBSC is currently trading at FY23e P/E of 4.9x, EV/EBITDA of 4.0x and EV/ton of EGP579.

The Ministry of Transport is about

Market Overview 


Prepared by: Mayada Amin - CETA, CFTe

The deficit in Egypt’s banking system net foreign assets widened to negative USD 27.1 bn during the month from negative USD 24.4 bn in May. According to Egypt's agreement with the IMF, the Central Bank pledged not to grant any bank an exception from maintaining open currency positions (which is the difference between assets and liabilities in foreign currency) and to consult with the fund if net foreign assets decreased for a period of 3 months by a value equivalent to two billion dollars. During 1H FY22/23, the deficit in Egypt's net foreign assets widened to about USD7.1 billion, reaching about USD19.9 billion at the end of December. 

The Electricity Ministry on Sunday received 35k tons of imported mazut to generate power at the national electricity grid, and dial-down power cuts. 

AMOC posted a consolidated net loss of EGP65 million compared to a consolidated net profit of EGP449 million in 4Q21/22 and EGP408 million in 3Q22/23. We believe this could be a result of the absence of FX gains during 4Q22/23, in addition to booking provision during the quarter. Revenues declined by 8% QoQ and increased by 5% YoY) to EGP6.5 billion. On a fiscal year basis, AMOC posted a net profit of EGP1.3 billion in FY22/23, an 11% YoY growth. AMOC is currently trading on a 23/24e PE of 6.0x and an EV/EBITDA of 3.7x.

Local fertilizers producers announced in an EGX release, the impact of the new natural gas feedstock 20% reduction decision. ABUK stated that they achieved the targeted production volumes for July 2023 for all the main products thanks to the cost-efficient production methods. The company returned to the normal rates of the received feedstock yesterday (1st of August). On the other hand, MFPC explained that it was not affected positively or negatively by the decision.

NBE and Banque du Caire are arranging a syndicated loan for the Egyptian Phosphate Company in Abu Tartour, at a value of USD800 million. The company is working on the implementation of a new industrial complex in the Abu Tartour plateau, at an investment cost of about USD1.2 billion.

National Paints Holding (NPH) has shaken up the leadership of Pachin, less than a week after it completed its takeover of the EGX-listed paintmaker.

Dragon Oil, wholly owned by the government of Dubai, intends to increase its oil production in Egypt by 27% in October, to 70,000 barrels per day.

HELI Board 1) approved a contract with Matrix Company to manage and operate the developed part of Merryland Park for three years for EGP17.5 million and 2) preliminarily approved an offer from a developer to develop a 77 feddan land plot in New Heliopolis on a revenue share basis.

ZMID declared EGP0.15/share cash dividends (DY of 2.7%). Record date is 28 August 2023. 

EFID could borrow up to USD45 mn from IFC to support its working capital and fund capex in its facilities in Egypt and Morocco. The board is set to meet on 31 August to discuss the loan.

Sources denied to Enterprise that the Sovereign Fund of Egypt (SFE) is looking to acquire a stake in Misr Pharmacies and confirmed that the SFE is not currently involved in any discussions with the owners of Misr Pharmacies to acquire a stake in the company, according to what was reported by local press.

Mienta will invest USD5 mn to establish a factory in the Elsewedy industrial zone in Ain Sokhna. The factory is expected to start operations next year and will produce 650k appliances by 2025. This is the company’s third factory in Egypt.